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NC Senate Spends Less Than House In Budget Changes

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(Photo by Joe Raedle/Getty Images)

(Photo by Joe Raedle/Getty Images)

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RALEIGH, N.C. (AP) — The North Carolina state Senate took a more cautious approach to proposed state government budget adjustments than the House by spending less and placing more money in reserves.

The Senate’s Republican-penned $20.1 billion spending plan for the coming year spends about $127 million less than a House Republican plan approved less than two weeks ago and $758 million less than what Democratic Gov. Beverly Perdue proposed. The biggest difference among the plans is Republicans won’t raise the state sales tax by three-quarters of a cent, as Perdue wants, to generate more revenue.

Senate leader Phil Berger, R-Rockingham, told reporters Monday the current two-year budget is in relatively good shape and no additional taxes are needed. Senate Republicans said they largely made changes to Medicaid and public education and would require 2 percent cuts elsewhere in state government in the second year of the budget starting July 1.

“We took a very minimalist approach,” said Sen. Richard Stevens, R-Wake, co-chairman of the Senate Appropriations Committee. “We had to tweak the budget because of Medicaid, and that’s essentially what we did. And we wanted to do some things in education, and we did.”

The Senate proposal, which likely will pass the entire chamber later this week with few changes, would cancel fewer required spending reductions for the public schools than the House.

While the House plan would reduce by two-thirds or $333 million the $503 million that districts were expecting to return to the state in the coming school year, the Senate proposal released late Sunday night would reduce the amount by only $74 million. Districts get to decide where to make the cuts, but superintendents say they’ve had increasingly fewer places to make reductions that wouldn’t require job reductions since the Great Recession.

The Senate proposal also would provide another $85 million for districts to use as they wish toward pay raises or hiring personnel.

Berger said several times at a news conference that the Senate proposal spent more on the public schools and the University of North Carolina and community college systems compared to last year. But the Senate budget doesn’t entirely make up for $259 million in federal funds that districts have used to hire personnel and will dry up during the next school year.

Berger said school districts knew the federal money was going away.

“We’ve chosen not to take the federal Obama stimulus money and substitute state dollars for that,” he said. Berger also said GOP budget-writers had concerns about using one-time tax windfalls, like the House, to trim those school reductions since there’s no guarantee the money will be available next year.

Perdue and the closely allied North Carolina Association of Educators verbally thrashed the Senate plan for declining to eliminate even less of the $503 million in mandated school district cuts than the House did. The federal funds had helped districts hire 5,400 workers this school year.

“The Senate budget means more pink slips for teachers and classroom cuts that would threaten our children’s future,” Perdue said in a statement. Perdue last week also offered another option — taxing video sweepstakes machines — to find additional revenues. Another Senate leader called the sweepstakes idea “ridiculous.”

Together NC, a coalition of liberal organizations and social service providers, said the Senate budget was an “embarrassment to North Carolina’s tradition of investment and innovation in education, health care and workforce development.”

Once the Senate budget is approved, the House and Senate negotiators would work out a compromise — Berger hopes by the end of next week — and send it along to Perdue. Perdue vetoed the budget last year. The Legislature overrode that veto with the help of five House Democrats.

Most rank-and-file workers in state departments would get a 1.2 percent pay raise in the Senate plan, but raises would be optional in the public schools and higher education. The House plan offered $250 bonuses to everyone. Government retirees would get a 1 percent cost-of-living raise. The House gives no such allowance.

The Senate and House are at odds in several other areas likely to dictate final budget negotiations:

— The Senate fully funds projected enrollment growth for the UNC system this fall and provided $35 million in additional need-based financial aid. The House doesn’t.

— The House set aside reserves to pay compensation to forced sterilization victims and to give tax breaks to corporations that send money to nonprofits for private school tuition for students. The Senate budget does neither.

— The Senate inserted Berger’s education overhaul in the budget and $47.4 million to pay for it. The House doesn’t have that proposal.

— Senators want to set aside $100 million in reserves for potential Medicaid cost overruns this coming year. The House didn’t.

— Senators left out additional money in the House budget for infant mortality prevention and tobacco cessation programs.

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